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ZCI - CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS TO JUNE 30,
2002
ZAMBIA COPPER INVESTMENTS LIMITED
(Registered in Bermuda)
("ZCI" or the "Company")
JSE code: ZCI
ISIN code: BMG988431240
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS TO JUNE 30, 2002
Unaudited Unaudited Audited
Six Six Year ended
months months December
ended ended 31, 2001
June 30, June 30,
2002 2001
US$`000 US$`000 US$`000
Loss from mining operations (11,609) (41,125) (83,448)
Interest and administration (14,739) (12,245) (18,934)
charges
Impairment of mining and (248,634) - -
intangible assets
Loss before taxation (274,982) (53,370) (102,382)
Taxation (8) (3,867) (3,883)
Loss after taxation (274,990) (57,237) (106,265)
Loss attributable to minority - 19,022 20,296
interests
Net loss (274,990) (38,215) (85,969)
Per ordinary share in US cents
Headline loss before exceptional (21.50) (30.95) (69.68)
item and amortisation of goodwill
Exceptional item - impairment of (202.87) - -
mining and intangible assets
Amortisation of goodwill - (0.23) (0.46)
Net loss (224.37) (31.18) (70.14)
CONSOLIDATED STATEMENT OF RETAINED EARNINGS FOR THE SIX MONTHS TO JUNE
30, 2002
Unaudited Unaudited Audited
Six Six Year ended
months months December
ended ended 31, 2001
June 30, June 30,
2002 2001
US$`000 US$`000 US$`000
Accumulated deficit at beginning (107,762) (21,793) (21,793)
of the period
Net loss (274,990) (38,215) (85,969)
Accumulated deficit at end of the (382,752) (60,008) (107,762)
period
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2002
Unaudited Unaudited Audited
Six months Six Year ended
ended June months December
30, 2002 ended 31, 2001
June 30,
2001
US$`000 US$`000 US$`000
Fixed assets 39,343 213,874 269,021
Investments and advances 54,142 38,649 45,932
Net current assets 90,194 90,203 18,420
Total assets less current 183,679 342,726 333,373
liabilities
Long term loans (380,105) (212,967) (263,346)
Provisions for liabilities (77,632) (78,332) (69,451)
and charges
Deferred purchase (61,913) (63,380) (61,557)
consideration
Minority equity interests - (1,274) -
Shareholders` equity (335,971) (13,227) (60,981)
Number of ordinary shares
in issue 122,559,900 122,559, 122,559,
900 900
Net asset value (per
ordinary share in US cents) (274.13) (10.79) (49.76)
CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX MONTHS TO JUNE 30, 2002
Unaudited Unaudited Audited
Six Six Year ended
months months December
ended ended 31, 2001
June 30, June 30,
2002 2001
US$`000 US$`000 US$`000
Net cash inflow / (outflow) from 25,461 (65,432) (109,120)
operating activities
Cash flow from investing
activities
Investment in KCM - - (2,832)
Capital expenditure (34,654) (42,015) (107,297)
Cash absorbed by investing (34,654) (42,015) (110,129)
activities
Cash flow from financing
activities
Proceeds from external borrowings 95,000 80,313 154,000
Repayment of external borrowings (60,000) - -
Advances by minority shareholders 2,813 4,688 21,000
in KCM
Net cash from financing 37,813 85,000 175,000
activities
Net increase/ (decrease) in cash 28,620 (22,446) (44,249)
Cash at the beginning of the year (33,916) 10,333 10,333
Net (debt)/cash at the end of the (5,297) (12,113) (33,916)
period
The financial statements were prepared in accordance with International
Accounting Standards and in terms of the same accounting policies
applied during the previous financial period.Chairman`s Statement
Restructuring
On August 19, 2002 the Company announced that it had reached agreement
on the restructuring of Konkola Copper Mines PLC ("KCM") with Anglo
American plc, ZCCM Investment Holdings plc, the Government of the
Republic of Zambia, the International Finance Corporation and CDC Group
plc. Following the approval of shareholders on September 10, 2002, it
is envisaged that the restructuring and related arrangements, as spelt
out in the ZCI circular issued on August 23, 2002, will be completed
shortly.
Impairment
The revised outlook for copper prices, combined with the fact that KCM
is not likely in the foreseeable future to be able to raise the funding
required to implement the Konkola Deep Mining Project, have impacted on
the projected life of the Konkola Mine and the values of KCM`s assets.
In light of the proposed restructuring and the funding available to KCM
at present, the Directors have evaluated the assets and determined the
need for an impairment to be reflected in the accounts for the six
months ended June 30, 2002. The impairment of the assets has been
determined to amount to US$249 million. The impairment calculation has
been reviewed by Deloitte & Touche.
KCM Operational Report
The ZCI Group has delivered an improved operating performance for the
six months to June 30, 2002, reducing its operating loss before interest
and taxation to US$11.6m from US$41.1m for the first half of 2001. The
impairment provision plus a higher interest charge increased the net
loss for the six months to US$275m (2001 - US$38.2m).
The period under review has seen improvements being achieved in most
aspects of the business with the benefits of the refurbishment programme
beginning to be realised. Capital expenditure on refurbishment over the
period amounted to US$35 million but further expenditure was constrained
by the limitation on finance available to KCM. Increases in volumes
mined and treated have lead to a reduction in unit costs. Cash
operating costs declined from an average of USc 81/lb over the last six
months of 2001 to an average of USc 73/lb over the period under review.
Safety standards and safety risk awareness continue as high priorities
at KCM and have improved over the period under review. The Lost Time
Injury Frequency Rate fell from 0.83 over the first six months of 2001
to 0.57 per 200,000 man hours in the first half of 2002. However, there
were regrettably two fatal accidents at KCM during the period.
Copper ore mined increased by 13% but this was partly offset by lower
grades. Higher tonnages of both copper and cobalt ore were milled and,
with improved recoveries at Nchanga, Konkola and the Leach Plant
together with higher throughput at the Nkana Smelter, production of
copper increased significantly. Sales were further boosted by the
realisation of approximately 8,000 tonnes of copper cathode stocks.
Throughput at the Nkana Smelter has improved but the plant continues to
experience operating problems.
The world economy has not rebounded to the extent hoped with base metals
prices remaining depressed. The average realised price of copper for
the period was USc 71.5/lb compared to USc 81.1/lb in the first half of
2001. It remains uncertain when prices will improve with copper
currently trading in the spot market at USc 69/lb.
Operating statistics for KCM for the six months to June 30, 2002
Six months Six months Six months
ended June 30, ended June 30, ended June 30
2002 2001 2002
2001
Tonnes Grad Tonnes Grad Tonnes Tonnes
es es
(t) (%) (t) (%) (t) (t)
Copper ore Tailings
mined Leach
Plant
Nchanga 2,214,000 1.84 1,717,000 2.18 Finished 35,797 35,741
Open Pit copper
produced
Nchanga 1,448,000 3.37 1,423,000 3.26 Smelting
Undergroun and
d refining
Konkola 925,000 3.29 913,000 3.37 Tonnes 187,535 146,61
Undergroun concentr 6
d ate
treated
Cobalt Ore Finished 69,939 54,744
mined copper
produced
Nchanga 302,000 0.52 766,000 0.65 Finished
Open Pit producti
on
Tailings Copper 110,363 90,485
Leach
Plant
Tailings 6,174 0.76 5,157 0.94 Cobalt 1,174 1,236
treated
Flotation Metal
sales
Copper ore 4,733,000 4,676,000 Copper 118,568 93,079
milled
Cobalt ore 406,000 383,000 Cobalt 1,272 1,297
milled
Metal in Average
concentrat price
e produced realised
Copper in 77,273 70,258 Copper 71.5 81.1
concentrat (Usc/lb)
e produced
Cobalt in 1,544 1,566 Cobalt 7.13 9.77
concentrat (US$/lb)
e produced
Board of Directors
All of the directors of the Company, except for CJ Colebank, have
indicated their intention to resign with effect from September 16, 2002.
RG Mills, S Georgala and J Mills have been appointed as directors in
their stead from the same date.
Administration
Subsequent to September 16, 2002, the administration of the Company and
company secretaries functions of the ZCI Group will cease to be provided
by Anglo American. The administrative function of the ZCI Group will be
provided by Maitland Management Services. The new Company Secretary
will be J Mills, whose business address is 6 Rue Adolphe Fischer, L-1520
Luxembourg.
Once again, the directors of ZCI wish to record their appreciation of
the great efforts made by all the employees of KCM during what has again
been a very difficult six month period.
Interim Report
The Company`s interim report of June 30, 2002 will be posted to
shareholders on or about September 20, 2002. Copies may be obtained from
the transfer secretaries, Computershare Investor Services Limited, 8th
Floor, 11 Diagonal Street, Johannesburg, 2001 (PO Box 1053, Johannesburg
2000, South Africa) and Computershare Investor Services PLC, PO Box 82,
The Pavilions, Bridgwater Road, Bristol, BS99 7NH (PO Box 82, Bristol,
BS99 7NH) or from the Company`s French listing agents, Euro Emetteurs
Finance, 48 boulevard des Batignolles, 75850 Paris Cedex 17, France.
SR Thompson Bermuda Registered Clarendon House
Office :
Chairman September 16, 2, Church
2002 Street
Hamilton,
Bermuda
Date: 16/09/2002 05:34:00 PM Produced by the JSE SENS Department
